Accounting Sector Public Assignment 2

Question 

1. Identified four basic accounting :

a.       Cash basis

b.      Accrual basis

c.       Modified cash basis

d.      Modified accrual basis

2. Influence cash toward accrual in Indonesia?

Answer 

1. Identified four basis accounting

a.       Cash basis

A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out. This contrasts to the other major accounting method, accrual accounting, which requires income to be recognized in a company's books at the time the revenue is earned (but not necessarily received) and records expenses when liabilities are incurred (but not necessarily paid for).

b.      Accrual basis

An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows/outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a company's current financial condition.

c.       Modified cash basis

An accounting method that combines elements of the two major accounting methods, the cash method and the accrual method. The cash method recognizes income when it is received and expenses when they are paid for, whereas the accrual method recognizes income when it is earned (for example, when the terms of a contract are fulfilled) and expenses when they are incurred. The modified cash basis method uses accruals for long-term balance sheet elements and the cash basis for short-term ones.

d.      Modified accrual basis

An accounting method commonly used by government agencies that combines accrual-basis accounting with cash-basis accounting. Modified accrual accounting recognizes revenues when they become available and measurable and, with a few exceptions, recognizes expenditures when liabilities are incurred. This system divides available funds into separate entities within the organization to ensure that the money is being spent where it was intended

2. Influence cash toward accrual in Indonesia?

In Indonesia government we are not full use accrual basis, example in Cirebon government in there LKPD Kota Cirebon Budget year 2008-2009 version SAP PP No 24/2005 after conversion based SAP PP No 71/2010 is not clear. So, there are need adaptation with careful.